Over 55s rule the roost in UK property market

For the first time in history, the total for the UK housing market has exceeded the £6tn mark, a true surprise due to the current financial crisis and its subsequent knock on effect with wage increases. Undertaken by Halifax, their recently published House Price Index, property prices have remained at an average of 2.7% higher during the ultimate 3 months of the year in comparison to last year’s figures.

Looking at the statistics in closer detail, it shows that 68% of private property wealth is focused in the south, at a total of £3.8tn. A figure that has increased by 62% since 2007. The large majority of this property wealth can be found in the South East, where its value exceeds that of Scotland, Wales and the North of England, combined. What also makes shocking reading, is the figure that under 35’s own a measly 3.3% of the market. This contrasted by the massive 63.3% that belongs to over 55s. Unfortunately for the younger generations this is a trend that is predicted to continue with ‘pensioner’ property wealth having increased by £33bn in the last six months.

In light of these facts, it is crucial to look at what has enabled the over 55s to gain this higher position. The main cause is simple enough. The wealth accumulated during the lifespan of Generation X, is on average 37% more than the equivalent earned today by the under 35, during the same comparable time period. This has contributed to the over 55s currently holding over 80% of the UK’s wealth. It is also impossible to ignore the influence that important factors such as soaring house prices, lower wages and crippling debt have had on the young generation. This has led to the disproportional share of wealth and property.

This trend in property ownership can be found through all price and income brackets, with those covering the highest level of UK property purchases, such as Mayfair estate agents, Wetherell, commenting that ‘the disparity between ages of the general home buyer isn’t an isolated occurrence. As Mayfair estate agents dealing with the highest end of the market, we still see the same imbalance.’

Taking a closer look at lending patterns provides additional insight into the matter. Whilst the number of mortgages offered to first-time buyers is down, loans for buy-to-let investors have increased by an average of 21% during the same period of time. This, combined with changes in ‘Pension Freedom’ provide over 55’s with a greater opportunity to take advantage of cheap mortgage rates and benefit from investment.

The younger generation are not completely in the lurch however. With over 33% of Generation X providing financial support to their offspring, many financial institutions have predicted that this younger generation are inline to benefit from a substantial windfall due to the sum property wealth of both parents and grandparents up to an average of £182,000.

The current property situation has forced the UK government into providing many subsidised schemes to enable this current generation with the opportunity to invest their earnings in to a new build house. This also offers house builders reassurance of continued work and therefore the ability to employ more workers, often from this younger generation, in order to fulfil this demand. The UK governments ‘Help to Buy’ scheme, devised to support first-time buyers, also offers a helping hand to those seeking to gain access to the property market. When saving money in a Help to Buy: ISA account, first-time buyers can expect a 25% subsidy for every £200 saved.

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